Wired: I’ll phrase the question differently. Google gets its revenue essentially from one source — online ads. One could argue that it’s not diversified enough.

Schmidt: The criticism is valid. We do get the vast majority of our revenue from advertising, which is a business that a lot of other people would like to be in. But there are some new revenue models on the horizon. The most interesting is probably Google Apps, where we’re already beginning to get some significant enterprise deals.

On Viacom’s Litigation:

Wired: In March, media giant Viacom sued Google, claiming that YouTube is stealing its video content. What made Viacom decide to go to court?

Schmidt: It’s a business negotiation. We’ve been negotiating with them, and I’m sure at some point we’ll negotiate with them some more.

Schmidt: No. They are creating an exclusive agent to license that content to anybody. In fact, News Corp. COO Peter Chernin and I had a long conversation about this. Before the announcement, Peter explicitly told me that this was not a competitor to YouTube. To me, it’s another effort to get the content out.

On How to Think about Google:

Wired: How should we think about Google today?

Schmidt: Think of it first as an advertising system. Then as an end-user system — Google Apps. A third way to think of Google is as a giant supercomputer. And a fourth way is to think of it as a social phenomenon involving the company, the people, the brand, the mission, the values — all that kind of stuff.
On More Broadband and Getting People to Use More Google Stuff:

Wired: The company is helping San Francisco and other cities install cheap, public Wi-Fi. Why?

Schmidt: Remember, one of the critical things for Google is for users to have inexpensive or free access to broadband. So, especially if somebody else is going to subsidize that, we think it’s great. If you have 10 percent broadband penetration in San Francisco and we can get it to 50 percent, that produces happier citizens. And we know that those searchers will use our services more. They’re much more likely to become a Google Calendar user or a Gmail user or a Google News user or whatever, because they like the performance.

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About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.